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FAIR VALUE MEASUREMENTS | 9 Months Ended
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Sep. 30, 2023
FAIR VALUE MEASUREMENTS |
FAIR VALUE MEASUREMENTS | NOTE 11 – FAIR VALUE MEASUREMENTS Accounting guidance establishes a fair value hierarchy to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value. Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. ​ Information regarding the fair value of assets measured at fair value on a recurring basis is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Instruments |  | Markets |  | Other |  | Significant
​ | ​ | Measured | ​ | for Identical | ​ | Observable | ​ | Unobservable
​ | ​ | At Fair | ​ | Assets | ​ | Inputs | ​ | Inputs
​ | ​ | Value | ​ | (Level 1) | ​ | (Level 2) | ​ | (Level 3)
September 30, 2023 |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Assets |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Securities available for sale |  | ​ |  |  | ​ |  |  | ​ | ​ |  | ​ |
U.S. Treasury securities | ​ | $ | 41,835 | ​ | $ | — | ​ | $ | 41,835 | ​ | $ | —
Obligations of U.S. Government sponsored agencies | ​ |  | 27,780 | ​ |  | — | ​ |  | 27,780 | ​ |  | —
Obligations of states and political subdivisions | ​ |  | 54,121 | ​ |  | — | ​ |  | 54,121 | ​ |  | —
Mortgage-backed securities | ​ | ​ | 35,840 | ​ | ​ | — | ​ | ​ | 35,840 | ​ | ​ | —
Corporate notes | ​ |  | 18,738 | ​ |  | — | ​ |  | 18,738 | ​ |  | —
Certificates of deposit | ​ | ​ | 732 | ​ | ​ | — | ​ | ​ | 732 | ​ | ​ | —
Mortgage servicing rights | ​ |  | 13,733 | ​ |  | — | ​ |  | 13,733 | ​ |  | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2022 | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Assets | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Securities available for sale | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. Treasury securities | ​ | $ | 142,097 | ​ | $ | — | ​ | $ | 142,097 | ​ | $ | —
Obligations of U.S. Government sponsored agencies | ​ |  | 21,749 | ​ |  | — | ​ |  | 21,749 | ​ |  | —
Obligations of states and political subdivisions | ​ |  | 83,186 | ​ |  | — | ​ |  | 83,186 | ​ |  | —
Mortgage-backed securities | ​ | ​ | 36,637 | ​ | ​ | — | ​ | ​ | 36,637 | ​ | ​ | —
Corporate notes | ​ |  | 19,994 | ​ |  | — | ​ |  | 19,994 | ​ |  | —
Certificates of deposit | ​ | ​ | 974 | ​ | ​ | — | ​ | ​ | 974 | ​ | ​ | —
Mortgage servicing rights | ​ |  | 9,582 | ​ |  | — | ​ |  | 9,582 | ​ |  | —
​ There were no assets measured on a recurring basis using significant unobservable inputs (Level 3) during these periods. ​ Information regarding the fair value of assets measured at fair value on a non-recurring basis is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ | ​ |  | Quoted Prices |  | ​ | ​ |  | ​ | ​
​ | ​ | ​ | ​ | ​ | In Active | ​ | Significant | ​ | ​ | ​
​ | ​ | Assets | ​ | Markets | ​ | Other | ​ | Significant
​ | ​ | Measured | ​ | for Identical | ​ | Observable | ​ | Unobservable
​ | ​ | At Fair | ​ | Assets | ​ | Inputs | ​ | Inputs
​ | ​ | Value | ​ | (Level 1) | ​ | (Level 2) | ​ | (Level 3)
September 30, 2023 |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
OREO | ​ | $ | 1,844 | ​ | $ | — | ​ | $ | — | ​ | $ | 1,844
Loans individually evaluated, net of reserve | ​ | ​ | 10,680 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 10,680
​ | ​ | $ | 12,524 | ​ | $ | — | ​ | $ | — | ​ | $ | 12,524
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2022 | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
OREO | ​ | $ | 2,520 | ​ | $ | — | ​ | $ | — | ​ | $ | 2,520
Impaired Loans, net of impairment reserve | ​ |  | 3,478 | ​ |  | — | ​ |  | — | ​ |  | 3,478
​ | ​ | $ | 5,998 | ​ | $ | — | ​ | $ | — | ​ | $ | 5,998
​ The following is a description of the valuation methodologies used by the Company for the items noted in the table above, including the general classification of such instruments in the fair value hierarchy. For loans individually evaluated (referred to as impaired loans prior to January 1, 2023), the amount of reserve is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate, the estimated fair value of the underlying collateral for collateral-dependent loans, or the estimated liquidity of the note. For OREO, the fair value is based upon the estimated fair value of the underlying collateral adjusted for the expected costs to sell. The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | ​ |  | ​ |  | Weighted |
​ | ​ | ​ | ​ | Unobservable | ​ | Range of | ​ | Average |
​ | ​ | Valuation Technique | ​ | Inputs | ​ | Discounts |  | Discount | ​
As of September 30, 2023 |  |  |  |  |  |  |  |  | ​
Other real estate owned |  | Third party appraisals, sales contracts or brokered price options |  | Collateral discounts and estimated costs to sell |  | 0 | % | 0 | %
Loans individually evaluated |  | Third party appraisals and discounted cash flows |  | Collateral discounts and discount rates |  | 0% - 53 | % | 30.9 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As of December 31, 2022 |  |  |  |  |  |  |  |  | ​
Other real estate owned |  | Third party appraisals, sales contracts or brokered price options |  | Collateral discounts and estimated costs to sell |  | 0 | % | 0 | %
Impaired loans |  | Third party appraisals and discounted cash flows |  | Collateral discounts and discount rates |  | 0% - 71 | % | 25.5 | %
​ The carrying value and estimated fair value of financial instruments at September 30, 2023 and December 31, 2022 follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Carrying | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
September 30, 2023 |  | amount |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash and cash equivalents | ​ | $ | 75,776 | ​ | $ | 75,776 | ​ | $ | — | ​ | $ | — | ​ | $ | 75,776
Securities held to maturity | ​ |  | 77,154 | ​ |  | — | ​ |  | 74,888 | ​ |  | — | ​ |  | 74,888
Securities available for sale | ​ |  | 179,046 | ​ |  | — | ​ |  | 179,046 | ​ |  | — | ​ |  | 179,046
Loans held for sale | ​ |  | 1,155 | ​ |  | — | ​ |  | — | ​ |  | 1,155 | ​ |  | 1,155
Loans, net | ​ |  | 3,312,145 | ​ |  | — | ​ |  | — | ​ |  | 3,184,002 | ​ |  | 3,184,002
Other investments, at cost | ​ |  | 21,542 | ​ |  | — | ​ |  | — | ​ |  | 21,542 | ​ |  | 21,542
Mortgage servicing rights | ​ |  | 13,733 | ​ |  | — | ​ |  | 13,733 | ​ |  | — | ​ |  | 13,733
Financial liabilities: | ​ | ​ | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | ​
Deposits | ​ | $ | 3,398,293 | ​ | $ | — | ​ | $ | — | ​ | $ | 3,072,252 | ​ | $ | 3,072,252
Securities sold under repurchase agreements | ​ |  | 17,191 | ​ |  | — | ​ |  | 17,191 | ​ |  | — | ​ | ​ | 17,191
Notes payable | ​ | ​ | 35,847 | ​ | ​ | — | ​ | ​ | 35,847 | ​ | ​ | — | ​ | ​ | 35,847
Subordinated notes | ​ |  | 23,500 | ​ | ​ | — | ​ | ​ | 23,500 | ​ | ​ | — | ​ | ​ | 23,500
Junior subordinated debentures | ​ | ​ | 10,972 | ​ | ​ | — | ​ | ​ | 10,972 | ​ | ​ | — | ​ | ​ | 10,972
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Carrying |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​
December 31, 2022 | ​ | amount | ​ | Level 1 | ​ | Level 2 | ​ | Level 3 | ​ | Total
Financial assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash and cash equivalents | ​ | $ | 119,351 | ​ | $ | 119,351 | ​ | $ | — | ​ | $ | — | ​ | $ | 119,351
Securities held to maturity | ​ |  | 45,097 | ​ |  | — | ​ |  | 43,770 | ​ |  | — | ​ |  | 43,770
Securities available for sale | ​ |  | 304,637 | ​ |  | — | ​ |  | 304,637 | ​ |  | — | ​ |  | 304,637
Loans held for sale | ​ |  | 648 | ​ |  | — | ​ |  | — | ​ |  | 648 | ​ |  | 648
Loans, net | ​ |  | 2,871,298 | ​ |  | — | ​ |  | — | ​ |  | 2,832,454 | ​ |  | 2,832,454
Other investments, at cost | ​ |  | 16,495 | ​ |  | — | ​ |  | — | ​ |  | 16,495 | ​ |  | 16,495
Mortgage servicing rights | ​ |  | 9,582 | ​ |  | — | ​ |  | 9,582 | ​ |  | — | ​ |  | 9,582
Financial liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deposits | ​ | $ | 3,060,229 | ​ |  | — | ​ |  | — | ​ |  | 2,732,007 | ​ | ​ | 2,732,007
Securities sold under repurchase agreements | ​ | ​ | 97,196 | ​ | ​ | — | ​ | ​ | 97,196 | ​ | ​ | — | ​ | ​ | 97,196
Notes payable | ​ |  | 1,929 | ​ | ​ | — | ​ | ​ | 1,929 | ​ | ​ | — | ​ | ​ | 1,929
Subordinated notes | ​ |  | 23,500 | ​ | ​ | — | ​ | ​ | 23,500 | ​ | ​ | — | ​ | ​ | 23,500
​ The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts nor is it recorded as an intangible asset on the consolidated balance sheet. Significant assets and liabilities that are not considered financial assets and liabilities include premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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